If we were to compare the monopolistically competitive firm's long run outcome to that of a perfectly competitive one,we would conclude that the monopolistically competitive firm:

Question

Quizplus · Accepted Answer

In the long run, the monopolistically competitive firm produces less than a perfectly competitive firm because they have some market power, allowing them to charge a higher price than the perfectly competitive price. This reduces the quantity demanded, leading the firm to produce less. Therefore, option B) is the correct answer. Options A) and D) are incorrect because, in the long run, monopolistically competitive firms tend to earn zero economic profits, whereas perfectly competitive firms earn normal profits. Option C) is also incorrect because a monopolistically competitive firm often charges a higher price than a perfectly competitive firm.

If We Were to Compare the Monopolistically Competitive Firm's Long